It is rather obvious that the government, in any society, is the only body who can exert legalized coercive control over exchange. There is no guarantee various committees assembled will make the right decisions, promote just legislation, nor are they safe from falling into corrupt practices without oversight of their own. But there is no one 'regulating' the government. Furthermore, unlike private entities, there is no competitive force to keep government powers in check. When the government fails to regulate effectively, they don't get their regulatory powers taken away, but increased. They are therefore rewarded for bad behavior, and in turn reward their bad private regulatees. How is this a solution?
While most people support government regulation to a certain extent, it is not because it results in the most fair, efficient, or moral regulation. Few question the quality of government regulation and take it for granted the government will have the best interests, best ideas, and best outcomes, despite evidence to the contrary. I think the recent bailout provides a clear example of government regulatory failures. Sadly, I think many people support government regulatory action simply because they cannot conceive anyone would do it better. Others support government regulation because they are direct beneficiaries and disregard the negative effects on others. I think this is wrong. While it may be true the government could be effective at regulating, a few things keeps them from doing so. One is their coercive power, the second is lack of competition or checks and balances...